Coventry Group acquire Steelmasters Group

Coventry Group Ltd (ASX: CYG) is pleased to announce the
completion of the acquisition of SteelMasters Auckland Limited (“Steelmasters Group”).

About the Steelmasters Group

Founded in 1973, Steelmasters Group is a leading Australasian supplier and manufacturer of industrial and speciality fasteners through its network of 12 branches (four in New Zealand and eight in Australia) with its head office in Auckland, New Zealand. The Steelmasters Group operates under several brands, ‘Steelmasters’ and ‘Galvmasters’ in New Zealand and ‘Boltmasters’ and ‘Profast’ in Australia. FY24 sales revenue is forecast to be NZ$40.3 million (split 54% Australia and 46% New
Zealand) and normalised EBITDA2 of NZ$7.36 million. 


The total consideration comprises a A$42.16 million upfront payment and is subject to certain conditions and customary working capital and net debt adjustments. The acquisition price represents a multiple of 6.1x EBITDA2. The total consideration will be funded via a combination of proceeds from the Institutional Placement and the additional debt facility. 


Coventry Group will operate Steelmasters Group as a separate division of TD to minimise integration risk and the division will continue to be run by Steelmasters Group’s existing management team.

Acquisition criteria


Acquisition aligned with Coventry Group’s strategy Steelmasters Group, represents a compelling profitable growth opportunity which is consistent with Coventry Group’s growth strategy and key acquisition criteria. 


The acquisition will:
• Increase Coventry Group’s customer base and industry exposure;
• Broaden the TD segment’s scale and reach through an additional 12 locations (8 in Australia and 4 in New Zealand);
• Expand the specialised fastener product range and add manufacturing capability;
• Deliver pro forma FY24F EPS accretion5 of approximately 31% (including synergies3 );
• Deliver cost synergies from procurement savings (improved trading terms) and logistics savings (leveraging CYG’s import capability and freight consolidation);
• Deliver revenue synergies from accelerated growth, cross selling opportunities and expanded product range; and
• Accelerate the utilisation of tax losses.